IMPACT OF THE ESRD PPS POLICY ON EFFICIENCY OF DIALYSIS PROVIDERS?A NATURAL EXPERIEMENT ABSTRACT Background: Congress mandated a new bundled payment system, ESRD prospective payment system (PPS), the first major reform of ESRD payment policy in nearly 30 years. ESRD PPS was designed to promote `efficient' care. We propose to critically evaluate the impact of this policy change on the relative efficiency (i.e, an increase in the inputs yields a proportional change in the outputs) and changes in the productivity (i.e., rate of output per unit input) of U.S. Medicare-certified dialysis providers before and after implementation of ESRD PPS. Goals: The goal of this project is to examine the effect of payment reform on changes in the efficiency of providing dialysis services overall and by organizational status and the relationship between these changes and patient outcomes. The relationship between provider efficiency and patient outcomes has not been previously examined among dialysis patients. We shall address the following aims before and after implementation of ESRD PPS in January 2011: 1. How did bundling affect facility unit costs, profit margins (identified through public filings and Medicare cost reports), and efficiency and productivity measures calculated in this project? How do changes in efficiency and productivity measures differ by dialysis organizational status (i.e., chain, profit, and size)? 2. How has the implementation of ESRD PPS affected the relationship between efficiency and quality of care? Two measures of quality of care will be utilized: a) improved scores on clinical process measures; and b) improved scores in patient outcomes including decreased mortality, blood transfusions, and hospital admission and re-admission rates? Methods: This retrospective cohort study uses a national CMS database, Medicare Renal Cost Report data, and Dialysis Facility Report to examine a four-year pre- and post-ESRD PPS period from 2007?2014 to conduct facility-level analyses. Trend differences for the relationship between resource use and the delivery of dialysis care will be analyzed using a DEA-linked Malmquist index that evaluates changes in efficiency and productivity over time. This analysis will also produce and rank individual facility efficiency scores that will be used as an explanatory variable in subsequent facility based outcomes analyses. These analyses will be stratified by industry segment (i.e., chains and independent) and case-mixed adjusted using facility-level demographic and co-morbid factors. Facility-level clinical and process metrics that reflect quality of care outcomes (taken from the Dialysis Facility Reports) will be linked to efficiency measures. Dialysis providers that score high on both efficiency and quality could provide models for other providers to adopt. Significance: These aims will be evaluated through the conceptual framework that there is a cost/quality tradeoff that exists in the dialysis center and ESRD treatment environments. The main tenant of this framework is that quality is expensive and that lower cost care is often also of lower quality. We anticipate our results will inform providers, policy analysts and the ESRD community regarding important differences in the process and outcomes of care by comparing historical efficiency measures to those after the current bundled payment system.